Broadband prices could soar as BT fights to charge higher line rental fees

16 April 2008 / by Rebecca Sargent

Broadband prices are at risk as BT challenges Ofcom’s Universal Service Obligation (USO). BT has complained to Ofcom over plans to upgrade broadband with a fibre optics connection network.

BT is currently tied to Ofcom’s Universal Service Obligation, which concerns "access" and "inclusion". Ofcom’s USO requires that BT make telephone line rental cheap and affordable for low income customers, and the abolishment of non-direct debit bill payment charges.

BT is, at the moment, committed to charging its low income customers a low, fixed rate line rental charge. However, the implementation of a fibre optics connection network will cost billions and BT is not prepared to lose money by continuing to charge low fixed rate line rental.

As a result, BT has appealed to Ofcom to change its USO policy and allow BT to charge higher line rental charges.

As technology evolves it is essential that services develop in line with them. New technology such as BBC's iPlayer and Channel 4's 4oD has pushed the limits of the current copper broadband network, and a speedier connection with higher bandwidth capacity is now required.

Just last year, broadband providers came under fire from regulator Ofcom for failing to offer the broadband speeds that were advertised. At the time, it was decided by Ofcom and the Government that key solutions included investment in infrastructure and ultra-fast broadband.

Rob Barnes, head of broadband and mobiles at moneysupermarket.com, said at the time:

"It’s great to see the Government and regulators have agreed that broadband in the UK needs to be improved. Recent reports have shown the UK’s broadband capabilities are slipping behind the rest of the world, we are now ranked 12th behind Japan, France USA and Italy."

According to experts, a fibre optics network connection would solve this problem, however, BT are not willing to be the sole provider to fund the upgrades. BT broadband is currently one of just two broadband providers who are tied to the USO and, as it stands would lose millions if it is not able to increase line rental fees.